Now is the time to start buying for the long term

I don't know if it was the markets or the Jager shots lost night giving me the sick feeling in the stomach, but today was definitely ugly for stocks. The mood on the street has been just depressing, with GM reaching its 55 year low and oil with a record high.

The good news is that there are lots a values on the street, and the intelligent investor can have some great opportunities out there for value plays. When everyone is panicking, stock prices of even solid companies go down to ridiculously low levels.

The way I am staying sane is to focus on value, and not what is going on in the indexes. You might get punished some in the short term, but if you find undervalued stocks with a good margin of safety, you will be rewarded in the long term. Don't worry about the short term price swings, just the long term fundamentals because the markets will eventually reward you.

Keeping a long term perspective is crucial. If a stock is trading 50% below its intrinsic value, it might take years before the market accurately prices it. Even if it takes four years, you will have 19% annualized returns, which most folks dream about it. Chances are the prices will reach its true value sooner giving you much greater returns, so there isn't much to lose. If you always keep that in mind, you will can keep yourself sane during these troubling times.

This is how the greats like Warren Buffet and Peter Lynch do it, so I would follow their advice instead of all the fools who want to get out to avoid the pain. The time to buy is when everyone is panicking.

Of course you have to have an excellent sense of the fundamentals and business risks involved or else this strategy is meaningless. But if you can recognize true value, these are the times you will make your big gains. Bear markets are a blessing.